The rise in bearish bets came as the the stock market stumbled. The Dow Jones industrial average (INDU) and the S&P 500 (SPX) have fallen in four out the past six weeks, while the Nasdaq composite (COMP) has been in the red for five out of the six.

The pullback followed a six-month rally that resulted in a 30% jump for the S&P 500 that helped stocks log the best first-quarter gains in 14 years.

"Stocks got out of the gates really strong, and there was a lot of bullish sentiment out there," said Bill Strazzullo, partner and chief market strategist at Bell Curve Trading. "But then the outlook started to change."

"These three factors have definitely taken a lot of the sail out of the bulls' ship, and we're seeing a rise in short interest as investors try to play defense and protect themselves," said Strazzullo.

Ryan Bend, a portfolio manager of the Federated Prudent Bear Fund (BEARX), has been boosting the short positions in his fund recently, as a result of the global concerns, particularly in financial stocks.

In the aftermath of the recent French and Greek elections, Bend said he became increasingly nervous about European banks and the viability of the euro, leading to an increase in short positions against international banks.

Late Thursday, JPMorgan (JPM, Fortune 500) made a surprise announcement that it has suffered trading losses of $2 billion since the start of April due to trades designed to hedge against risk.

The revelation raises concerns about the broader financial sectors, as investors wonder whether there "are more skeletons in the closet" either at JPMorgan or other big banks, said Todd Salamone, vice president at Schaeffer's Investment Research.

And those worries could certainly spark some more short interest in the group, he added.

The KBW Bank Index (BKX), which tracks 24 U.S. banks including JPMorgan, Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and Wells Fargo (WFC, Fortune 500), rallied more than 26% during the first quarter of the year, but has declined more than 6% in April and May.